Germany’s biggest pension fund, Bayerische Versorgungskammer (BVK), is creating two funds for European residential and Asian-Pacific real estate strategies to be administered by Universal-Investment.
The €62bn investor plans to eventually invest €3.6bn using Luxemburg alternative investment fund (AIF) structures set up to separate administration from asset management.
“This umbrella fund structure allows us on the one hand to mandate fitting and flexible real estate specialists for each sector and for each geographical segment,” said Norman Fackelmann, head of real estate investment at BVK.
“On the other hand, we can include the funds into our overall allocation strategy in an efficient and transparent way.”
One of the funds will be set up to look at European residential investments with three sub-funds covering Nordic and Dutch residential markets, and student housing and micro-apartments in German-speaking countries.
This fund is targeting an investment volume of around €1.7bn, including leverage.
The second fund, with four sub-funds, will focus on real estate in Asia and Australia and seek to invest €1.9bn, including leverage.
Each of the sub-funds will be managed by specialist asset managers.
Fackelmann said these two funds “significantly increase” BVK’s real estate exposure “in order to further diversify our portfolio”.
BVK’s real estate exposure stood at 14% earlier this year with a 15% target but that was “under review” as Fackelmann noted in March.
He added: “Additional real estate projects are already in the concrete planning phase.”
Alexander Tannenbaum, real estate managing director at Universal investment, said the “principle of separating asset management and administration” by German investors was well established in other asset classes, such as enquiries, but “has now also prevailed in the real estate segment”.